The power of the Commissioner to waive interest under Section 220 (2a) of the Income-tax Act, 1961, is prospective and can be exercised only in respect of levies made after the Section came into force.

SUSANTA CHATTERJEE, J.

( 1 ) THE present writ petition has been filed by Messrs Saurastra Agencies (P.) Ltd. impleading the Union of India through the Secretary, Ministry of Finance, and the Commissioner of Income-tax praying, inter alia, for issuance of a writ of mandamus commanding the respondents, their men and agents to recall and/or rescind the order dated October 31, 1989, passed by the Commissioner of Income-tax, West Bengal-II, under Section 220 (2a) of the Income-tax Act and further commanding the Commissioner to rehear the application after giving sufficient and adequate opportunity of adducing records in respect of such application on the ground that the exercise of the power by the Commissioner of Income-tax under Section 220 (2a) of the said Act is a quasi-judicial exercise of power and, as such, the Commissioner of Income-tax acted without jurisdiction in not exercising his jurisdiction in accordance with the provisions thereof.

( 2 ) IT appears from the order dated October 31, 1989, that the Commissioner of Income-tax, West Bengal-II, P-7, Calcutta, has found that the conditions precedent for the exercise of discretion for the waiver of interest under Section 220 (2) are not satisfied. The petitions filed under Section 220 (2a) of the Income-tax Act, 1961, have been rejected. It has been found that Section 220 (2a) of the said Act, was inserted with effect from October 1, 1984, by the Taxation Laws (Amendment) Act, 1984, and that the power of the Commissioner to waive interest chargeable under Section 220 (2) of the Income-tax Act can be exercised only in respect of the levies made after October 1, 1984. It has further been found that the interest for the assessment years 1965-66, 1967-68, 1968-69, 1969-70, 1970-71, 1971-72 and 1973-74 was levied prior to October 1, 1984, that is, before Section 220 (2a) was inserted in the Income-tax Act, 1961. It has, therefore, been concluded that the petition under Section 220 (2a) of the said Act filed by the assessee-company in respect of such levies cannot be considered.

( 3 ) MR. Anupam Chatterjee, learned counsel appearing for the petitioner, has strongly assailed the impugned order on the ground that the exercise of power by the Commissioner of Income-tax under Section 220 (2a) of the said Act, is a quasi-judicial exercise of power and, as such, the Commissioner of Income-tax acted without jurisdiction in not exercising his jurisdiction in accordance with the provisions thereof.

( 4 ) HE has drawn the attention of this court to Section 220 (2a) of the Act in detail. He has also drawn the attention of the court to the decision in Smt. Shama Mir v. CIT. It has been considered there as to penalty and reduction or waiver and at what stage the Commissioner could reduce or waive penalty. It has also been considered there as to whether the Commissioner could do so only after penalty is imposed and whether the penalty could be waived or reduced even in respect of an assessment year prior to the introduction of Section 271 (4a), The whole discussion related to the matter as to whether the letter of the Commissioner can be treated as an order reducing the penalty and whether the assessee could raise that point before the High Court on the ground that the point is implicit in the questions referred.

( 5 ) ANOTHER decision cited from the Bar is Indra and Co. v. CIT. It was made clear that an application for waiver or reduction of penalty can be made even after confirmation of the penalty order by the appellate authorities.

( 6 ) THIS court has considered further the case of the Andhra Pradesh High Court in Ashok Enterprises v, CIT. The Division Bench of the Andhra Pradesh High Court has found that the power of the Commissioner to waive penal interest under Section 273a of the Income-tax Act, 1961, is prospective and can be exercised only in respect of levies made after the Section came into force with effect from October 1, 1975. Therefore, where the penal interest was levie

Click Here to Read the rest of this document